Understanding the Role of Board Gender Diversity in Firm ESG Score: A Comparative Study within Industries

Abstract

While existing research has often focused on either specific industries or generalized findings across sectors, this study examines the impact of board gender diversity (BGD) on Environmental, Social, and Governance (ESG) performance across varied industry sectors in the European Union. The research finds robust support for a positive association between BGD and overall ESG scores, bolstered by Resource Dependence Theory and Critical Mass Theory. However, we argue that this association is more complex. For example, the existence of factors such as the industry sector in which firms operate may limit the benefits of diversity, which suggests that this association may differ according to the context. In fact, industry-specific analyses highlight distinct patterns: finance sectors demonstrate a linear correlation between BGD and ESG outcomes, while manufacturing sectors show nuanced relationships. Notably, the mining industry exhibits an intriguing pattern of ESG performance, peaking when women on boards are either a minority or a majority. This study underscores the strategic importance of gender diversity in enhancing corporate sustainability, advocating for tailored diversity strategies aligned with industry dynamics. Limitations include data temporality and regional specificity, suggesting opportunities for future longitudinal and comparative research on diversity's role in corporate sustainability strategies globally.